December 20, 2010

Econometrics vs. Statistics

Econometrics as defined by Michael Brennan (Preface to Econometrics) is the application of modern statistical methods to economic theory that has been formulated in mathematical terms. It is a quantitative measurement of economic relationships, thus it is sometimes referred to as mathematical economics.  Econometrics differs somehow with mathematical economics in that its mathematical formulations are designed with a view to statistical measurement and testing.

Statistics is the science that deals with the collection, tabulation and systematic classification of quantitative data, especially with respect to frequency distribution and as a basis for inference and induction respecting probable future trends (Webster's dictionary).   Statistics is an important aspect of econometrics.

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